{"id":69412,"date":"2020-12-23T17:29:42","date_gmt":"2020-12-23T17:29:42","guid":{"rendered":"https:\/\/chinadialogue.net\/?p=69412"},"modified":"2021-02-15T09:47:52","modified_gmt":"2021-02-15T09:47:52","slug":"south-koreas-finance-of-green-palm-oil-drives-destruction-in-indonesia","status":"publish","type":"post","link":"https:\/\/dialogue.earth\/en\/forests\/south-koreas-finance-of-green-palm-oil-drives-destruction-in-indonesia\/","title":{"rendered":"South Korea\u2019s finance of \u2018green\u2019 palm oil drives destruction in Indonesia"},"content":{"rendered":"\n

In 2019, South Korea imported 745,000 metric tonnes of palm oil, up from 194,000 metric tonnes in 2005. It is one of the fastest-growing markets for the commodity in the world, driven by government policies to boost palm oil as a lucrative green industry and to secure food and energy supplies from overseas.<\/p>\n\n\n\n

Most of this palm oil comes from Indonesia and Malaysia and until recently was used in processed food, such as instant noodles. But under the country\u2019s \u201cGreen New Deal<\/a>\u201d introduced earlier this year, palm oil is being promoted as a source of renewable energy, as biofuel for transport and power generation.<\/p>\n\n\n\n

\"South<\/div>
(Graphic: James Round<\/a> \/ China Dialogue)<\/div><\/div><\/div><\/div>\n\n\n\n

But palm oil\u2019s green credentials are hotly debated. While the US and Europe are taking steps to restrict use because of links to widespread deforestation and high carbon emissions, South Korean public institutions have given millions of dollars in subsidies to companies developing plantations in Indonesia in the name of \u201cgreen\u201d development.<\/p>\n\n\n\n

Environmental activists and lawyers in South Korea have become increasingly vocal about the industry\u2019s links with human rights violations and deforestation in Indonesia, and are demanding the government stop financing destructive practices.<\/p>\n\n\n\n

Demand soars<\/h2>\n\n\n\n

South Korea relies on overseas imports for 97% of its energy and 75% of its food resources. After the 2008 global food crisis<\/a>, the government set out to secure both edible and industrial palm oil, launching an \u201cOverseas Agro-resources Development\u201d programme in 2009. That public loan scheme covered 70% of the business costs of private South Korean companies to produce and distribute wheat, soybean, corn and crude palm oil.<\/p>\n\n\n\n

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Recommended<\/span><\/span><\/div><\/a>\n\n\n\n

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Palm oil is designated a strategic commodity under South Korean law. The Overseas Agriculture & Forest Resources Development and Cooperation Act, and the Overseas Resources Development Business Act are used as legal grounds to subsidise Korean palm oil companies overseas. The Korea Forest Service and various finance institutions classify oil palm development as \u201cbioenergy afforestation\u201d projects. This is a perverse use of the word afforestation, which generally means planting trees for environmental and climate benefits, not clearing tropical forest for monoculture plantations.<\/p>\n\n\n\n

\u201cI find these acts very imperialistic. The government is helping companies to take resources from other countries because we are resource-poor,\u201d said Chung Shin-young, a lawyer with Advocates for Public Interest Law (APIL), who has been investigating South Korea\u2019s palm oil industry and leading the campaign to stop public finance of the industry.<\/p>\n\n\n\n

\"South<\/div>
(Graphic: James Round<\/a> \/ China Dialogue)<\/div><\/div><\/div><\/div>\n\n\n\n

Public and private investment in the palm oil industry has also been driven by the use of palm oil as a transport fuel since the mid 2000s<\/a>. Since 2015, South Korean companies importing or exporting petroleum fuel products have had to ensure their oil products are at least 2.5% biodiesel. The proportion was later increased to 3%. As of 2017, palm oil and its by-products accounted for 88%<\/a> of South Korea\u2019s biodiesel imports.<\/p>\n\n\n\n

Public money funds deforestation and human rights abuses<\/h2>\n\n\n\n

South Korean palm oil producers found themselves in the international spotlight in 2016 when environmental advocacy group Mighty Earth, in partnership with the Korean Federation for Environmental Movements (KFEM), exposed<\/a> massive forest clearance in the palm oil concessions of Korindo and Posco International in Indonesian-administered Papua. Satellite data and drone images showed that Korindo had cleared 30,000 hectares of rainforest in the previous two years while Posco International had cleared 19,000 hectares in the previous four.<\/p>\n\n\n\n

\"Deforestation<\/div>
Korindo established its first oil palm plantation in Papua in 1998. Recent years have seen a marked expansion of its activities in the province, with 30,000 hectares of forest cleared between 2013 and 2016. (Image: Mighty Earth)<\/div><\/div><\/div><\/div>\n\n\n\n

\u201cThe Korean model of palm oil plantation deforestation harkens back to the old, dark days of the palm oil industry when forests, wildlife and indigenous lands were obliterated for the purpose of establishing giant expanses of monoculture plantations, the profits of which mainly go to foreign owners,\u201d said Deborah Lapidus, senior campaign director at Mighty Earth.<\/p>\n\n\n\n

The problem is these two companies have been operating their palm oil business with public money from the Korea Forestry Service and the Export-Import Bank of Korea (Korea Exim Bank), said Chung.<\/p>\n\n\n\n

\u201cIf you look at the detailed statement of the government loan to Posco International, you will learn that they rarely run a business on their own money. But it\u2019s not only Posco International. LG International, Daesang, and JC Chemical before them got a loan from the Korea Forestry Service,\u201d said Chung. Her team was one of the first local groups to investigate South Korean palm oil companies\u2019 links to rights violations and massive deforestation in Indonesia since 2016, together with the Korean Federation of Environmental Movements (KFEM). <\/p>\n\n\n\n

\u201cThe agency\u2019s very first public loan to the palm oil industry was to an oil palm afforestation company, Daesang Holdings, in 2008. In total, 3.8 billion-won (around US$3.2 million) was financed for a bioenergy afforestation project in Indonesia,\u201d explained Shin Gun-seop, an administrative officer at Korea Forest Service\u2019s Overseas Resources Development Office.<\/p>\n\n\n\n

Between 2010 and 2019, Korea Forest Service provided 40.1 billion won (around US$33 million) to plant oil palms in around 24,000 hectares, mostly in Indonesia, according to Shin. Daesang Holdings, LG International Corp., Kodeco, and JC Chemical were some of the recipients of these public loans.<\/p>\n\n\n\n

Livelihoods destroyed<\/h2>\n\n\n\n

The expansion of South Korean palm oil companies has put indigenous communities\u2019 livelihoods at risk, many of whom had been displaced from their forest land in the past.<\/p>\n\n\n\n

\u201cMy concern is that the presence of Korindo and Posco International in Papua will further widen gaps and deepen injustices in Papua where big business take everything and the local community is left with empty hands. For most indigenous Papuans, forests are their supermarkets, banks, hospitals and sacred places. Massive forest conversion means they lose their livelihoods,\u201d said Angky Samperante from the Papuan rights group Yayasan Pusaka. His team has been struggling to protect the rights of indigenous peoples and the environment of Papua against Korean palm oil companies since 2010.<\/p>\n\n\n\n

\"A<\/div>
A family from the Kowin Marind tribe whose land has been affected by deforestation to make way for a Korindo plantation in Papua (Image: Mighty Earth)<\/div><\/div><\/div><\/div>\n\n\n\n

The Forest Stewardship Council (FSC) has been closely monitoring<\/a> Korindo\u2019s operations since complaints against its destructive practices and human rights violations were first made by Mighty Earth in 2017, but has stopped short of stripping it of its sustainability certification. Korindo Group published a statement<\/a> on its website in July 2019 saying it rejected complaints that it was involved in illegal forest fires but agreed to work with FSC to improve its standards.<\/p>\n\n\n\n

The Korean palm oil industry has been linked with the suffering of indigenous communities in Indonesia from the start. Korindo Group started the first \u201cKorean\u201d palm oil business in Merauke<\/a>, Papua province, in 1995. There the Marind and Mandobo peoples had already been forced from their customary forest by the central government\u2019s development plan in the early 1970s. PT. Tunas Sawa Erma, the palm oil company of Korindo Group, acquired a palm oil business permit in 1997 and by December 2001 had planted palms over 7,800 hectares of land. This set the scene for the next set of large-scale Korean palm oil ventures in Indonesia from 2007.<\/p>\n\n\n\n

The major players<\/h2>\n\n\n\n

Apart from Korindo, six other big South Korean companies have become major players in the palm oil industry, financed by public money. Almost US$200 million worth of public funding has been given to these companies to develop over 65,000 hectares of palm oil plantations in Indonesia. These estimates are based on publicly available and verified data from the Korea Forest Service, Export-Import Bank of Korea and the South Korean parliament. And according to an independent investigation by APIL (Advocates for Public Interest Law), almost all of these companies have ongoing land and rights violation conflicts with local communities.<\/p>\n\n\n\n

\"Many<\/div>
(Graphic: James Round<\/a> \/ China Dialogue)<\/div><\/div><\/div><\/div>\n\n\n\n

Local advocacy groups have been running a campaign to stop government loans to the palm oil companies in Indonesia since APIL and KFEM (Korean Federation for Environmental Movements) published a report<\/a> based on their investigation in 2019.<\/p>\n\n\n\n

\u201cIt\u2019s our tax money going into the industry that is complicit in land grabbing, indigenous people\u2019s rights and labour rights violations. We are pushing Korean export credit agencies to have their own human rights standards to follow when providing a public finance loan to overseas projects like the palm oil industry. It is the government offices\u2019 constitutional responsibility to avoid any human rights violations,\u201d said Chung.<\/p>\n\n\n\n

Carbon emissions<\/h2>\n\n\n\n

Local scientists are also raising their concerns about the government\u2019s growing \u201ccarbon debt\u201d given its support for the palm oil industry.<\/p>\n\n\n\n

\u201cSouth Korea has been using a by-product of crude palm oil called Palm Fatty Acid Distillate (PFAD) as a main source of bioenergy. Due to its high carbon intensity and environmental cost, PFAD would not be permitted as a main source of biodiesel in countries like the US and UK,\u201d said Shin Jung-Yull from Korea Energy Agency\u2019s audit division.<\/p>\n\n\n\n

According to Shin\u2019s 2018 PhD dissertation, PFAD accounted for 47% of Korea\u2019s biodiesel feedstock in 2015, and emits 5.7 times more greenhouse gases than alternative oils. The European Union plans to phase out<\/a> palm oil-based transport fuels by 2030, because of the deforestation and higher emissions they cause.<\/p>\n\n\n\n